By staff reporter Yang Yue
China National Petroleum Corp. (CNPC), the country’s
largest oil and gas company, has become the first foreign company to sign an oil
The US$ 3 billion contract with the Iraqi government, signed August 28, sets terms for developing the country’s Adhab oil field. The deal also marked the revival of a 1996 contract between CNPC and the Iraqi government that had been cancelled by the war.
In addition, CNPC set up a joint venture with China North Industries Corp. for the project.
Although CNPC agreed to more pro-Iraq concessions in the latest contract than in the 1996 agreement, analysts consider the long-awaited deal a good start for the Chinese company as it seeks to tap into the recovering, oil-rich country.
“The first thing is to find a foothold and then to seek expansion in the market,” said Yin Gang, a researcher with the Institute of West Asian and African Studies at the Chinese Academy of Social Sciences (CASS).
Oil was discovered in Adhab, in southern
According to the 1996 agreement, CNPC would invest up to US$ 1.3 billion to develop the field. The contract was to be valid for 23 years, with a daily crude production target of about 90,000 barrels.
A source familiar with the latest deal told Caijing the Chinese side has set an annual production target of 5 million tons, which is considered “a huge amount.”
At the moment, the United Nations has given
When the CNPC contract was signed in 1996, then-Iraqi Oil Minister Amir Muhammad Rasheed said “the contract could be implemented as early as tomorrow.” Clearly, he was too optimistic. The 2003 war halted the deal.
But in October 2006, when
During a state visit by Iraqi President Jalal Talabani
According to the commercial consulate at the Chinese
Li Guofu, director of the
CASS’s Yin said a service contract is not as risky as a deal that includes production access, even though current international oil prices are high. He said most western oil firms are not content with earning service fees alone, which helped CNPC win the deal.
But the Gulf War destroyed almost all the country’s oil
industry infrastructure, and daily production slumped to around 300,000 barrels.
In December 1996, under a UN Security Council resolution,
Shahristani said earlier his country expected to produce
up to 6 million barrels every day by 2012. To reach the goal,
To lure foreign investment,
A key concern is the delicate security situation in
Li said risks are inevitable for oil projects in
One Chinese worker in
A Chinese source with the Adhab project said that, in
addition to balancing the interests of different religious and ethnic groups in
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